The Return of the Long-Run Phillips Curve
This paper integrate microfoundations of wage staggering into a simple dynamic general equilibrium model with rational expectations. In this context we show that a permanent increase in money growth leads to a permanent increase in the rate of inflation and a permanent reduction in the level of unemployment. In short, we derive a microfounded long-run downward-sloping Phillips curve.
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- Marika Karanassou & Hector Sala & Dennis J. Snower, 2002.
"A Reappraisal of the Inflation-Unemployment Tradeoff,"
479, Queen Mary University of London, School of Economics and Finance.
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- Karanassou, Marika & Sala, Hector & Snower, Dennis J., 2002. "A Reappraisal of the Inflation-Unemployment Tradeoff," IZA Discussion Papers 636, Institute for the Study of Labor (IZA).
- Karanassou, Marika & Sala, Héctor & Snower, Dennis J., 2005. "A reappraisal of the inflation-unemployment tradeoff," Open Access Publications from Kiel Institute for the World Economy 3457, Kiel Institute for the World Economy (IfW).
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"Aggregate Dynamics and Staggered Contracts,"
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"Monopolistic Competition and Optimum Product Diversity,"
The Warwick Economics Research Paper Series (TWERPS)
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